THE Government has voiced concern over a potential 100% tariff on semiconductor imports proposed by the United States, cautioning that such a move could have a profound impact on its economy and export competitiveness.
Responding to a supplementary question in Parliament, Investment, Trade and Industry Minister Tengku Zafrul Abdul Aziz said the US investigation under Section 232 of its Trade Expansion Act could result in new duties on imported semiconductors, unless companies have invested or committed to building manufacturing facilities on American soil.
“This morning, I read the news that President Trump plans to impose a 100% tariff on all semiconductor chips, with exemptions only for firms building or committed to build plants in the US,” he said.
Malaysia’s exports of semiconductors to the United States currently remain exempt from retaliatory tariffs, but this exemption is not guaranteed and may be reviewed at any time, he added.
The US Department of Commerce launched the Section 232 investigation in April to determine whether semiconductor imports — including chips, semiconductor manufacturing equipment, and derivative products — pose a threat to national security.
“Any decision from this investigation could pave the way for tariffs on all imports, regardless of country of origin, except for companies with direct manufacturing presence in the US,” Zafrul said.
He added that the Malaysian government, through MITI, is maintaining regular direct engagement with the Office of the United States Trade Representative (USTR) and the US Department of Commerce to clarify policy direction, ensure transparency, and advocate for Malaysia’s strategic trade interests.
“As a precautionary measure, we are lobbying to ensure that any policy changes or exemption criteria are conveyed to us early and negotiated fairly, so Malaysia’s status as a trusted trade partner remains intact,” he said.
According to 2024 data, Malaysia’s exports of electrical and electronics (E\&E) products to the US totalled RM119.86 billion — roughly 20% of total national E\&E exports. Of this, semiconductor exports accounted for RM60.6 billion.
This sector supports over 72,000 skilled jobs and includes more than 7,200 local suppliers, primarily SMEs. The E\&E and semiconductor industries have spillover benefits across key sectors such as automotive, medical devices, renewable energy, digital services, and aerospace.
“If tariffs are imposed under Section 232, Malaysia risks losing a key market if our products become less competitive,” Zafrul said, though he noted that the US has yet to release full implementation details.
He also clarified that the exemption may not be country-based, but rather company-based, depending on direct investment within the United States — regardless of where a company’s global operations are based.
“This means the impact will vary according to the structure of multinational firms operating in Malaysia,” he explained.
To mitigate risks, the Malaysian government is taking several key steps. These include sustained bilateral engagement with US trade authorities and expanded outreach to affected exporters and industry stakeholders.
“MITI has intensified dialogue with major exporters and is encouraging diversification into alternative export markets,” Zafrul said.
“We remain committed to closely monitoring developments and engaging proactively with the US. We want clarity — we want to know exactly what they mean when they refer to ‘semiconductors’,” he added. - August 7, 2025
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